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HMRC internal manual

International Manual

HM Revenue & Customs
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Non-residents trading in the UK: whether trading

Mere purchase of goods does not amount to trading

The isolated activity of buying goods in the UK does not necessarily amount to trading in the UK. This principle was settled in the 1860 case of Sulley v Attorney General [2TC149]. A New York firm purchased goods in England for sale in America. It had an office here where the English resident partner saw to the purchasing and shipping of the goods. The Court of Exchequer (a Court of Appeal) found that `The profits of the firm in America do not accrue in respect of any trade carried on in this country, but in respect of the trade carried on in New York, where the main business is conducted’. Most other countries take the same view as the UK about the mere purchase of goods not usually amounting to trading.

Importance of contracts

The earliest case law on whether trades were carried out in the UK or not were cases settled in the late 19t h century when business methods were far less complex than nowadays. Many of the early tax cases place great reliance on whether contracts, usually for the sale of goods, were made in the UK. See INTM263030 onwards for further guidance on legal aspects of where and when a contract is made. While it is still true to say that where contracts are regularly made in the UK whether by the principal himself or by the principal’s UK agent that is strong evidence of trading here, that fact is not decisive.